Buying A Car After Bankruptcy
Many people assume that getting credit or a new loan after bankruptcy is impossible. The truth is that credit and loans after bankruptcy are more in your reach than delinquent accounts and a history of missed payments. While you may not be driving off the lot with a brand new car immediately after your debts are discharged, you will have a chance at getting a new car loan after following a few steps.
Credit Report
The first step you want to take after a bankruptcy is checking your credit report. Chances are that not all of your accounts will be updated to reflect your newly discharged debt information. You will want to make sure your account balances read accurate, as well as your account standings. After a debt discharge any debts that were included in your case should reflect a zero balance and any markings of "past due" or "delinquent" should be deleted. If you have inaccurate information on your credit report it is important to dispute the information and request an update from your lender right away.
Once you have ensured your credit report information is accurate you should start to see some improvement to your credit score. Remember that credit recovery after debt problems takes time and effort, so don't be looking for too much too quickly. There are two paths you can take at this point that can get you a vehicle while you rebuild your credit, but choose wisely.
Choosing A Path
For many people, the best path to take is the slow and steady. This means finding a cheap, used vehicle to get you to work and back that you can buy in cash. While this may not sound ideal, here is the plan behind the process. Instead of taking out a secured loan right away, you can begin to establish a good credit history with your existing accounts and possibly one new one. Rather than making a car payment, you can focus your extra money towards building your emergency fund and making planned, but smaller, purchases on your existing lines that can be paid off in a few months. Repeating this cycle for six months to a year can put you in a position to apply for an auto loan at a far better rate.
The other path is to apply for a secured vehicle loan after your debt discharge. It is important to remember that looking for a secured line of credit right after a bankruptcy could pose some challenges. You may not be able to borrow the amount you would like, nor lock in a favorable rate. However, this isn't to say that a new secured line right after a bankruptcy is the worst idea either. Responsibly paying on a secured line of credit can boost your credit score quicker than unsecured lines like credit cards. Just remember to budget for your auto loan payment and make smart use of your money management skills during this time.
Credit Report
The first step you want to take after a bankruptcy is checking your credit report. Chances are that not all of your accounts will be updated to reflect your newly discharged debt information. You will want to make sure your account balances read accurate, as well as your account standings. After a debt discharge any debts that were included in your case should reflect a zero balance and any markings of "past due" or "delinquent" should be deleted. If you have inaccurate information on your credit report it is important to dispute the information and request an update from your lender right away.
Once you have ensured your credit report information is accurate you should start to see some improvement to your credit score. Remember that credit recovery after debt problems takes time and effort, so don't be looking for too much too quickly. There are two paths you can take at this point that can get you a vehicle while you rebuild your credit, but choose wisely.
Choosing A Path
For many people, the best path to take is the slow and steady. This means finding a cheap, used vehicle to get you to work and back that you can buy in cash. While this may not sound ideal, here is the plan behind the process. Instead of taking out a secured loan right away, you can begin to establish a good credit history with your existing accounts and possibly one new one. Rather than making a car payment, you can focus your extra money towards building your emergency fund and making planned, but smaller, purchases on your existing lines that can be paid off in a few months. Repeating this cycle for six months to a year can put you in a position to apply for an auto loan at a far better rate.
The other path is to apply for a secured vehicle loan after your debt discharge. It is important to remember that looking for a secured line of credit right after a bankruptcy could pose some challenges. You may not be able to borrow the amount you would like, nor lock in a favorable rate. However, this isn't to say that a new secured line right after a bankruptcy is the worst idea either. Responsibly paying on a secured line of credit can boost your credit score quicker than unsecured lines like credit cards. Just remember to budget for your auto loan payment and make smart use of your money management skills during this time.
